Following months of extensive discussions and negotiations, the European Anti-Deforestation Regulation (EUDR) was approved on the 19th of April 2023. The legislation makes it mandatory for European companies to verify, before importing or trading within the European Union (EU) market, that the commodities and products included in its scope are ‘deforestation-free’. This means that the several processes required for their production must not promote deforestation, forest degradation, or violation of human rights after the 31st of December 2020.
The commodities affected by the new legislation include cattle, soya, palm oil, cocoa, coffee, wood, rubber, coal, including products that contain, were fed with or were produced using these products (e.g. leather, chocolate, furniture), finally including also printed paper and a number of palm oil derivatives.
The main goal of the regulation is to reduce the EU’s contribution to deforestation, which is inextricably linked to climate change and biodiversity loss. According to FAO, between 1990 and 2020, about 178 million hectares of forest cover were lost globally, an area three times the size of France. The vast majority of the deforestation occurred in the tropics, and most of it was driven by the expansion of agricultural areas for the production of agroforestry products. Because these products are mainly intended for export, importing and consuming countries may be indirectly responsible for the loss of forest areas. This phenomenon is called “embedded deforestation”. According to a study by WWF (2020), the European Union is the world’s second-largest ‘importer’ of tropical deforestation after China.
Between 2005 and 2018, EU’s imports of agroforestry commodities caused the loss of 2.7 million hectares of forest, an average of 208,000 hectares per year. The commodities causing the largest deforestation were, in descending order: soybeans, oil palm fruits, wood, beef and derivatives (e.g. leather), cocoa, coffee, rubber, rapeseed, and maize. According to a study by Pendrill (2022), the average deforestation caused by soybeans and oil palm imports accounted for 58% of EU’s embedded deforestation – of which 33% from soybeans and 25% from oil palm.
Within the EU, five countries (Germany, Spain, Italy, Netherlands and France) are responsible for 70% of deforestation linked to the import and consumption of agroforestry goods.
Between 2005 and 2018, Italy’s imports of beef, cocoa, coffee, palm oil, rubber, soybean and maize have contributed to the conversion of 370.000 hectares of forest to agricultural lands – an area bigger than the Valle d’Aosta Region.
In the same period – as recorded also at the European level – palm oil imports were the main cause of Italy’s embedded deforestation, with an area almost equal to the size of Rome (about 125.000 hectares) converted from forests to palm plantations for the production of oil for Italy. Today, the main exporter of palm oil to Italy is Indonesia: 87% of the deforestation linked to Italian palm oil imports takes place here.
Soy imports were the second main cause of Italian embedded deforestation in the period 2005-2018, with more than 111.000 hectares – an area almost twice the size of the city of Sassari – converted from tropical forests to agricultural areas for the production of soybeans exported to our country. Brazil is the country that has most experienced the loss of forests to make room for agricultural areas for soybean production.
As for coffee, in the period 2005-2018, due to Italian imports, an area equivalent to the size of Verona was deforested: 21.000 hectares, mainly in Honduras and Ivory Coast. This places Italy in third place among the main liable in the EU, after Germany and France.
With regard to cocoa and rubber import, always in the period 2005-2018, an area equivalent to the size of the city of Genoa was deforested: in particular, 16.000 hectares for cocoa (8% of all EU), almost half of which in the Ivory Coast; and 8.000 for rubber (9% of all EU), almost half of which in Indonesia.
In the same period, 2.000 hectares were deforested for maize imports (5% of all EU), 84% of which occurred in Brazil.
Finally, Italy is the leading European country in terms of responsibility for deforestation due to beef imports. In the period 2005-2018, 67.000 hectares of forests – an area equivalent to the size of the city of Ravenna – were converted into pasture land for cattle breeding, later exported to Italy. Most of this conversion happened in Brazil (90%).
In Brazil, the expansion of pastures and soybean crops occurs at the expense of the Cerrado, which constitutes the type of savanna with the highest level of biodiversity in the world. Cerrado occupies a quarter of the Brazilian territory but, according to the national official statistics (Inpe), it has lost 1.07 million hectares – the size of the Basilicata region – of natural vegetation between August 2021 andJuly 2022. Considering also that Cerrado holds most of the Brazilian watershed springs, the loss of this ecosystem represents a serious threat to the country’s water security.
The document approved on the 19th of April is the result of a consiliation of the various changes suggested to improve the first draft of the legislation proposed by the European Commission in November 2021. In fact, during 2022 several changes were proposed to the original text. On the one hand, in June, the EU Council pushed for a less stringent approach in order to protect the interests of individual member states. On the other hand, the European Parliament promoted a more ambitious proposal. For instance, the Parliament called for an extension of the scope of the Regulation, by proposing to include maize among the covered product and ecosystems other than forests to be conserved, such as grasslands, peatlands and wetlands. However, in the two years following publication of the Regulation, the amendments suggested by the Parliament will be reviewed. In particular, the necessity and feasibility of extending the scope to other threatened products and ecosystems will be verified. In addition, the possibility of extending due diligence requirements to financial institutions based or operating in the EU, which will have to ensure the compliance of their clients’ activities with the Regulation, will be assessed.
Finally, one of the main criticisms throughout the legislative process leading up to the publication of the Regulation, is the lack of specific requirements in relation to the protection of indigenous and other local communities in producing countries. While the draft presented by the Environment Commission proposed that the production of commodities should comply with human rights laws and international standards, the final version of the Regulation did not include such requirements. Among these are customary property rights and the right to Free, Prior and Informed consent (FPIC). In this regard, the concern lies in the fact that relying solely on governments and national laws – and their often poor implementation – might not be enough to ensure basic human rights compliance.
To conclude, companies importing the commodities and products within the Regulation’s scope will be heavily impacted by it and should thus prepare as soon as possible to adapt to its requirements. Etifor has been monitoring the market trends for years and is at the forefront of scientific research and consultancies on these topics. By implementing the EMMA method, Etifor can support companies in the development of deforestation-free supply chains.